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E60 / E61 (2004 - 2010) BMW 5-Series E60 Sedan was first seen in the Unites States in the fall of 2003 with a 2004 Model Year designation. The E61 wagon followed shortly there after. The E60/E61 5 series is now available as a 528i, 528xi, 535i, 535xi, 550i and a 535xi sports wagon! -- View the E60 Wiki

I own a BMW 525i, 2007 (E60), done 41000 miles. At the cold start up takes the RPM to 1000 and then slowly starts coming down. At about 700 rpm it suddenly takes a sudden dip to below 500 and quickly jumps back to 600-or 700. Then its settles at 600 or about. The car also does the same when it is at idle say at a traffic signal. it can take a sudden jerk from 600-700 to below 500 and again back.

BMW service center insist that some sensor is to be changed. earlier they replaced the fuel sensor but it did not help. Now they want too change the NO2 sensor. Expensive proposition that is. Anyone who has the same experience and may have resolved it may advise.

I have a MY10 N52K engine that i don't drive a lot (17K Kilometers) and it does the same, although it does not drops as low as yours.
On the first 2 seconds of cold starts it usally has unstable idling between 1000RPM - 800RPM . . . just the first 2 seconds after that it idles fine.

I had an '01 3-series with a similar problem years ago, and the dealer fixed it with a software update. 41 K seams low mileage to replace O2 sensors. If the car is not throwing codes, I'd be hesitant chasing sensors when paying for each one out of my own pocket.